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Net Worth

Definition:  The net worth is the value of a company or person.  It can be figured by subtracting liabilities from assets.

TeenAnalyst Advice: This is simply a way of calculating how much a person has.  It's considered their "liquidation" value.  This means that if they sold all of their assets and repaid their liabilities, this is the amount they'd have left over.

Net worth can be deceptive because, for companies, the value of an asset is carried at its book value (the price paid).  So if the asset becomes more valuable, the net worth also increases.  But you can't tell that simply by subtracting liabilities from assets.

 

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